Variance Analysis

[Paavana]

hello....i am having some confusoions about how to tackle the following problem...please help me...

June 2007 question number 20

A company operates a standard marginal costing system . last month the company sold 200 units more than it planned to sell. the foollowing data relate to last month
Standard Actual
40 38
Selling price 30 29

What was the favourable sales volume contribution variance for last month?
A. £1,800 Adverse
B. £1,800 Favourable
C. £3,600 Adverse
D. £3,600 Favourable

[Sonal]

Hi,

Answer is £2,000 Favourable variance

In the question, examiner has asked to calculate sales volume contribution variance
It means that we need to derive standard contribution per unit
Standard contribution per unit = Standard selling price – Standard variable cost
= 40 – 30
= 10
Difference between actual sales and standard sales has been given as 200 units F
Formula of sales volume contribution variance:
Standard contribution margin x (Actual sales – Standard sales)
= 10 x 200 units
= 2000 F

[Sonal]

hi,

The question which you have asked is Q. 20 but the options you have provided are of Q. 19...I guess that's why you have got confused.